Repco Home Finance Ltd made a poor stock market debut, opening at Rs 159.95 a share or a discount of seven per cent to the issue price on the National Stock Exchange to recover in mid-day trades only to end the day at Rs 164.7 a share in a strong Mumbai market on Monday. The private equity backed firm had set Rs 172 as the issue price.
The issue had seen bids for 1.6 times the number of shares offered, after the IPO saw poor investor response during the first two days with just 2 per cent subscribed and that, too, led by retail investors.
Institutional investors had ensured the IPO sailed through bidding three times the number of shares reserved for them. Also, retail investors fully subscribed to their portion but the issue did not see much interest from non-institutional investors comprising high networth individuals (HNIs) and corporates, who bid for just over a third of all the shares reserved for them.
The company sold a total of 15.72 million shares at a price band fixed at Rs 165-172 per equity share, raising around Rs 270 crore in the process.
The firm had earlier raised Rs 40.1 crore through allocation to anchor investors, which included several mutual funds like Goldman Sachs India Fund, Reliance Banking Fund, Nomura India Investment Fund Mother Fund and Franklin India Prima Fund.
Repco Home Finance, a Chennai-based housing finance company, is backed by private equity major Carlyle Group besides Wolfensohn Capital Partners and Creador.
The Carlyle Group invested a little over Rs 108 crore in Repco Home Finance between 2007 and 2009, through primary and secondary purchase of 49.7 per cent stake. The PE firm recently sold a little over 23 per cent (pre-dilution) stake in secondary transactions to Wolfensohn Capital Partners and Creador. It also sold 2.78 per cent stake to Antique Broking and Shardul Securities besides certain HNIs, raking in a total of approximately Rs 190 crore through these sales.
Carlyle’s average acquisition price is Rs 47 per share while Wolfensohn Capital Partners and Creador bought their stake for Rs 153-Rs 156 per share. At the current market valuation, Carlyle is sitting on unrealised gain of 3.5x on its remaining stake. Wolfensohn and Creador are sitting on 6 per cent gain on their investment.
Repco Home Finance will use the IPO proceeds to augment its capital base, which will increase its net worth and enable it to meet future capital adequacy requirements. The company, which has a strong focus on southern India, has a loan portfolio of over Rs 3,100 crore ($588 million) as of September 2012. This loan portfolio has grown at a compounded annual growth rate (CAGR) of 41 per cent between March 2008 and September 2012.
Repco’s profit after tax has grown at a CAGR of 45.47 per cent – from Rs 15 crore for FY08 to Rs 67.5 crore for FY12. For the six months ended September 2012, the company reported a total income of Rs 188.8 crore with a net profit of Rs 35.6 crore.
SBI Capital Markets, IDFC Capital and JM Financial Institutional Securities were the book running lead managers to the issue.
(Edited by Prem Udayabhanu)
